Correlation Between Natura Co and Ser Educacional
Can any of the company-specific risk be diversified away by investing in both Natura Co and Ser Educacional at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Natura Co and Ser Educacional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natura Co Holding and Ser Educacional Sa, you can compare the effects of market volatilities on Natura Co and Ser Educacional and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Natura Co with a short position of Ser Educacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and Ser Educacional.
Diversification Opportunities for Natura Co and Ser Educacional
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Natura and Ser is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Ser Educacional Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ser Educacional Sa and Natura Co is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Natura Co Holding are associated (or correlated) with Ser Educacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ser Educacional Sa has no effect on the direction of Natura Co i.e., Natura Co and Ser Educacional go up and down completely randomly.
Pair Corralation between Natura Co and Ser Educacional
Assuming the 90 days trading horizon Natura Co Holding is expected to under-perform the Ser Educacional. But the stock apears to be less risky and, when comparing its historical volatility, Natura Co Holding is 1.77 times less risky than Ser Educacional. The stock trades about -0.02 of its potential returns per unit of risk. The Ser Educacional Sa is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 572.00 in Ser Educacional Sa on August 24, 2024 and sell it today you would earn a total of 120.00 from holding Ser Educacional Sa or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natura Co Holding vs. Ser Educacional Sa
Performance |
| Timeline |
| Natura Co Holding |
| Ser Educacional Sa |
Natura Co and Ser Educacional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natura Co and Ser Educacional
The main advantage of trading using opposite Natura Co and Ser Educacional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, Ser Educacional can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ser Educacional will offset losses from the drop in Ser Educacional's long position.| Natura Co vs. Brpr Corporate Offices | Natura Co vs. Beyond Meat | Natura Co vs. Autohome | Natura Co vs. Delta Air Lines |
| Ser Educacional vs. GAEC Educacao SA | Ser Educacional vs. Yduqs Participaes SA | Ser Educacional vs. Qualicorp Consultoria e | Ser Educacional vs. MAHLE Metal Leve |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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